Buying a new car may seem like an emotional decision. But in the long term, you would be far happier if you considered it as a financial decision. One way to make the financial part easier would be to get pre-approved for an auto loan.
Getting pre-approved for a loan lets you know what lenders are willing to offer you. It gives you the power to negotiate and helps avoid any last-minute surprises that may crop up at the end of the deal process. It also allows you to keep your options open as you don’t need to stick with the lender that pre-approved you, and you could switch to someone offering a better deal.
Here’s what you learn from the pre-approval process:
- You learn what you can afford. Because you should never stretch your budget while buying a new vehicle.
- You can figure out what the monthly payments are at different purchase prices on your own. Letting the salespeople do this for you can make the monthly cost seem better but could work out more expensive in the long run.
- You learn what interest rates are available long before you apply for a loan and are likely to have a couple of offers before you step into a dealership.
- You also arrive at the dealership when you’re ready to buy a car. You’ll have checked your credit reports, corrected errors, and improved your score if necessary.
Pretend You’re Shopping With Cash
Don’t let the salespeople distract you with the low monthly payment numbers. These are easy to manipulate and can make a car appear less expensive than it is. When you’re pre-approved for a loan, you buy the vehicle on price. Here’s what you should remember:
- Pay as little interest as possible
- Pay the right price for the car and don’t let low monthly payment rates distract you
- Check dealer offers
When you’re pre-approved for a loan, you have more negotiating power. So always negotiate on the price of the car and not the freebies or monthly payment amounts. But don’t ignore any financing offers and manufacturer incentives. Compare them carefully because there’s a chance you could get a better deal over there. Make sure you read all the fine print before going ahead with the deal.
